We keep a constant eye on your ingredient costs. Why?

Posted on May 25, 2012 in Swine Performance
By Jim Garrison

Formulating swine diets today varies a great deal by what price you may have ingredients booked at or by what you will be charged by your manufacturing mill.  Here at Vita Plus, we use our Nutrition Program Alternatives tool to evaluate your options and provide some answers that match your specific needs.  Not only is this of value on the farm, but it may even be specific to different mills where the feed is made.  Let’s explore. Say we formulate a corn-soy diet with high amino acids and discover we can save you $1.25 per pig based on the manufacturer’s weekly price list.  That sounds like a good deal, right? But let’s dig a little deeper.  This manufacturer is pricing lysine at $2,520 per ton or $1.26 per pound.  But the market says that cost should be about $1.15 per pound.  That price difference actually increases savings to $1.43 per pig – an additional $0.18 per pig by saving on just one ingredient.  Thus, we may need to do some more exploring to determine which manufacturer is offering you the best price. Now let’s look at soybean meal.  As you know, we often have a large variable between cash and contract price.  In this example, the cash price of soybean meal is $416 per ton.  That means the best plan is to use a high amino acid program.  Or is it? You, like many producers, may have soybean meal booked far below that price.  Thus, we need to individually determine your booked and cash price ingredients to decide what nutrition program best suits your needs to maximize profitability.  For example, if soy is booked at $325 and lysine is in the market at $2,240 per ton, the net effect of using high amino acids is actually a loss of $0.44 per pig. Careful thought needs to be applied when deciding which ingredients to use on your swine operation.  Having the lysine out of the market like we saw in the first example can cost a producer $9,000 per 50,000 head of pigs.  The second example shows that feeding the high amino acids as a blanket technique could cost up to $0.99 per head – a whopping $49,500 for 50,000 head marketed. When profits are good, it is easy to not look for the $0.10-per-pig advantage, but when margins get tight, we all feel the pressure. Whether we are looking for $0.10 or $0.99, we are constantly using the Nutrition Program Alternatives tool as it is one of the essential strategies for providing a sound overall nutrition program at Vita Plus.  That’s because knowing all the variables and options out there can easily make a difference to your bottom line – the difference between making and losing money in today’s tough markets. About the author:  Jim Garrison is an account manager with the Vita Plus swine team.  He earned his degree from Mankato State University and has been involved in the agriculture and feed industry for 23 years.  He started his work with Vita Plus in 1996 and since that time he has worked exclusively with swine.  Garrison’s other interests include outdoor activities, such as boating, camping, fishing and upland game hunting.  He lives in Minnesota with his wife, Joni, and three children Chelsea, 19, Mara, 17, and Joshua, 8.

Category: Feed costs
Feed ingredients
Swine Performance